With the earnings season rolling in, Indian companies have started reporting their performance in the June to September (Q2) period of FY22. Here are two bank stocks on which analysts remain bullish and see an upside of up to 40 per cent after their Q2 results:
Federal Bank Limited
The shares of the bank zoomed by 2 percent from the day’s low of Rs 129 on Monday and hit its new 52-week high of Rs 132.70. In the past five days, the stock has zoomed by approximately 8 per cent. On a YTD basis, the stock has delivered a 50 per cent return to its investors.
In Q2FY23, the net income interest (NII) of the bank rose by 19 per cent to Rs 1,762 crore up from Rs 1,479.4 crore in the same quarter the previous year,
The bank reported its highest-ever net profit of Rs 704 crore in the second quarter of FY22 which is an increase of 53 per cent year-on-year (YoY) from Rs 460 crore in the same period a year ago.
Its asset quality also showed improvement as gross non-performing assets (GNPA) came at 2.46% as compared to 2.69% from the previous quarter.
LKP Securities has a ‘Buy’ call on Federal Bank with a target price of Rs 180 which represents an upside of 39 per cent from the current levels.
Federal Bank Limited is an Indian private sector bank that has more than 1,272 branches spread across different states in India. Late Ace investor Rakesh Jhunjhunwala holds a 1.01 per cent stake in the bank.
HDFC Bank Limited
The shares of the bank opened at Rs 1,438 on Monday and zoomed by 1.3 percent to reach an intraday high of Rs 1,456. In the past week, the stock has moved by 2.3 per cent. However, the stock has been volatile and has shed 5 per cent on a YTD basis.
As per the latest quarterly results, the Net interest income (NII) of the bank rose by 19 per cent to Rs 21,021.2 crore up from Rs 17,684.4 crores Year on Year (YoY).
Their standalone net profit in Q2FY23 rose by 20 per cent year-on-year to Rs 10,605.8 crore up from Rs 8,834.3 crore in the same quarter of the previous financial year.
Gross non-performing assets (NPAs) were at 1.23 per cent as against 1.35 per cent as on
September 30, 2021.
Global brokerage firm CLSA has maintained a ‘Buy’ rating on HDFC Bank stock with a price target of Rs 2,025 which represents an upside of 40 per cent from the current levels.
HDFC Bank Limited is the largest private bank in the country. Soon the company is set to merge with its Parent Housing Development Finance Corporation (HDFC) Ltd. The bank will have the shareholders’ meeting on November 25th to obtain approval for the merger.
Written by Anoushka Roy
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